Rising medical premiums are pushing one in eight US workers to cut their retirement contributions, and the workers taking the biggest hit are the ones who can least afford to. The findings land as employer open enrollment periods are underway across the country, with ACA marketplace enrollment opening November 1.
The figure comes from LIMRA’s 2026 Benefits and Employee Attitude Tracker (BEAT) Study, which surveyed 4,052 US employees in January 2026. More than three-quarters of workers covered by employer-sponsored health plans saw their premiums rise this year, including 17% who faced increases of more than 10%. Half of those affected responded by adjusting their spending or benefits decisions. For most, that meant cutting discretionary expenses or switching to a cheaper medical plan. For one in eight, it meant reducing how much they put into retirement.
The numbers are worse among younger workers. Nearly three in four Gen Z employees whose premiums increased took some form of financial action, and were the most likely group overall to reduce benefit spending.
“It is concerning that some workers, especially Gen Z, are reducing their 401(k) contributions due to rising medical insurance premiums,” said Kimberly Landry, research director of workplace benefits at LIMRA and LOMA. “Even small reductions in retirement contributions can have significant long-term effects.”
A Gen Z employee earning $50,000 annually who drops their contribution rate by just 1 percentage point saves $500 less per year. Compounded over 30 to 40 working years, that gap widens considerably.
The pressure on workers is not happening in isolation. According to KFF’s 2026 Employer Health Benefits Survey, workers covered by employer-sponsored family plans are now contributing an average of $7,471 annually toward premiums, up 9% from 2025, while total family premiums reached $28,303, growing at 5% and outpacing both wage growth of 3.7% and general inflation of 2.7%.
Nearly half of US employers, meanwhile, anticipate further healthcare budget increases in the coming plan year, according to a 2026 report by NFP.
When plan design shifts more of the premium burden onto employees, through higher deductibles, narrower networks, or reduced employer contributions, workers absorb the cost somewhere. LIMRA’s data shows that for a meaningful share of them, retirement savings is where the adjustment happens.
The 2026 BEAT Study also found that workers are making these decisions quickly and with limited information. Sixty-three percent of employees spend less than an hour reviewing their options and enrolling, and more than a quarter take less than 30 minutes. Those decisions are made under financial strain. Forty-nine percent of workers are very or extremely concerned about healthcare and insurance costs. Only 45% of workers said they could pay an unexpected $2,000 medical bill outright.
LIMRA’s companion paper, Redefining Advice: Integrating Healthcare into Retirement Planning, takes the argument a step further, making the case that healthcare should be treated as a core component of retirement planning rather than a separate consideration.
Jae W. Oh, a fellow of the LIMRA Retirement Income Institute and author of the paper, pointed to the interaction between healthcare costs, income, and taxes as a structural challenge that tends to get underweighted in standard retirement planning conversations. “Successful retirement planning should focus not simply on how much income someone generates, but how much remains after taxes and healthcare expenses,” he said.
One dimension of that is the Affordable Care Act (ACA) subsidy cliff, which became more acute after enhanced premium tax credits expired at the end of 2025. Workers who retire before Medicare eligibility at 65 and rely on ACA marketplace coverage can now lose premium subsidies entirely if a single retirement account withdrawal or Roth conversion pushes their income above 400% of the federal poverty level.
The timing of those withdrawals, and the year they show up as income, can materially affect how much marketplace coverage actually costs. Medicare adds another layer: Part B and D premiums are calculated from income reported two years earlier, meaning a large withdrawal at 63 can raise premiums at 65.
These are plan design and income sequencing questions that sit at the intersection of group benefits and individual financial planning. Hub International’s 2026 Benefits Cost Trends Report projected that combined medical and prescription drug costs would rise 8% to 10% this year, with prescription-only costs tracking 10% to 12%.
When employers respond to those increases by shifting more of the burden onto workers, the effects reach beyond the benefits budget. Reduced retirement contributions, deferred savings, and diminished financial resilience fall on the same employees those plans are meant to protect.
The LIMRA data does not tell advisors what to recommend. But it does clarify the stakes of getting plan design wrong, particularly in a year when so many workers are spending less than 30 minutes deciding how to allocate limited benefits budgets that have to cover health coverage, retirement contributions, disability protection, and not much else.
